Fonterra uses change of ownership clause to buy back RD1

Fonterra uses change of ownership clause to buy back other half of RD1 chain

July 1 (BusinessDesk) – Fonterra Cooperative Group has exercised a pre-emptive right to buy the 50% of rural supplies chain RD1 that it doesn’t already own after its Australian partner was acquired by Canada’s Agrium.

No price was disclosed for the transaction. RD1, with 57 stores in New Zealand, had total assets of $137 million and net assets of $14.9 million, as at May 31, 2010, its accounts show.

Landmark, the Australian rural supplies chain owned by AWB, acquired a half stake in RD1 from Fonterra in 2006 as part of a trans-Tasman alliance. Landmarks contribution was a net $35 million to $45 million, according to an AWB statement at the time.

It competes with PGG Wrightson Ltd., New Zealand’s biggest rural services company. Canada’s Agrium acquired AWB last December, triggering Fonterra’s right to buy back the business.

“RD1 is a solidly performing company with strong farming roots and it’s great to have it back in the family,” said Fonterra chief executive Andrew Ferrier.

The cooperative will review the business over the next three months with the aim of better leveraging RD1 for the benefit of shareholders.

RD1 annual revenue has increased to $741 million from the $394 million it achieved in 2006, he said.

(BusinessDesk)

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